Rising rates are good news
for money market accounts, CDs
By Tim Talevich
THE SMART MONEY these days in terms been in a long time to move your money from a regular bank savings account, but with a few
of short- and medium-term savings is on basic, low-yield savings accounts into higher- key differences: You usually need to make a
money market accounts and certificates of yield money market accounts and CDs. minimum deposit, and there’s a limit to how
deposit(CDs). Also, thanks to today’s improving many withdrawals you can make each
Interest rates for these safe, simple returns, investors who traditionally take on month. These accounts are considered a good
accounts have been steadily increasing since more risky products are giving money mar- option if you need quick access to your
the Federal Reserve began raising short-term ket accounts and CDs another look. money, but on a limited basis.
interest rates in 2004. “Money market accounts and CDs offer ■ With a CD, you’re also required to
“The interest rates for money market returns worth considering, without the make a minimum deposit, but you commit
accounts are higher than they have been for volatility and risk that typically accompany the money for a specified period of time, or
severalyears,”says Valerie Wiederhorn,senior today’s stock and bond investments,” com- term. Generally, the longer the term, the
product manager at Capital One Direct ments Wiederhorn. higher the interest rate received. If you with-
Banking. “Given this performance, savvy Which option you choose—money mar- draw early, you’ll likely be penalized.
investors are reassessing where they keep ket account or CD—depends on how readily Unlike other investments, CDs and
their cash.” you need access to your money. Here’s a look money market accounts come with added
What does this mean for you? For at the options. peace of mind. These accounts are FDIC-
starters, it’s more beneficial now than it has ■ A money market account is similar to insured up to $100,000 per depositor. C
How the rates stack up
Capital One offers money mar-
ket accounts and CDs to Costco
members. Both accounts require
a $5,000 minimum deposit.
Costco members receive exclusive rates, and Executive Members receive an interest credit
when they open an account.
Accounts are FDIC-insured up
to $100,000 per depositor.
Account information is
available online 24 hours a day.
For money market accounts,
withdrawals may be made from
ATMs or by check.
HERE’S A LOOK at how Costco and Capital One’s CDs and money market accounts compare
to national averages. (Rates assume a $5,000 deposit.)
C ostco m embers National average†
Money market account
* Certificates of Deposit: As of 4/12/06, the annual percentage yield (APY) in effect for a 60-month CD with a
deposit of less than $100,000, is 5.32%. Other rates and terms are also available. Rates subject to change without notice.
A minimum deposit of $5,000 is required to open a CD. Fees could reduce earnings. A substantial penalty may be imposed
for early withdrawal.
** Money Market Account: As of 4/12/06, if the daily balance of this money market account was $100 or more, the
APY was 4.51%; if not, the APY was 0.00%. Minimum initial deposit amount is $5,000. Terms and conditions of this offer
are subject to change without notice. Rates are variable and are subject to change. Fees could reduce earnings.
Withdrawal limits apply.
These products are offered by Capital One, F.S.B. and Capital One Bank, members FDIC.
† Source: Banxquote.com national averages as of 4/12/06.
For more details or to open
an account, visit costco.com
and click on “Services,” or call